Does Structure Still Resonate?
Lately it feels as if every commercial bank and every private debt fund is chasing after the same deals. When 25 basis points of credit pricing can seem like the great divide between winning a new client and a “maybe next time” phone call, does deal structure really matter? Or is price truly the only deciding factor?
At CapX, we find that each call for financing has the propensity to start with a straightforward request. In our experience, intermediaries and borrowers do share the same desired capital need, but what happens more often than not is that there are issues with communication regarding the long-term impacts on the capital structure of the request. Only by digging deep and asking the right questions do we discover what solutions will be truly mutually beneficial. Just completing another request for proposal and waiting for the decision doesn’t benefit either party.
Understanding what growth looks like for a company and what other financing decisions may lay in the future are key topics that can frame the structure that best fits the funding need today. The differences may be subtle yet meaningful. For example, if the structure were to be a lease versus a loan on equipment assets, it may help a borrower avoid conflict with their senior bank relationship when they need to continue to focus on managing growth.
Companies experiencing fast growth need capital providers that can both consult and move quickly at their pace. The better a capital provider’s breadth of knowledge in legal, tax, or GAAP motivations can also be the difference in tailoring a custom solution versus an inflexible, off-the-shelf product.
As a middle market capital provider focusing on growth and liquidity, CapX continues to ask the questions because at the end of the day we believe structure does matter. Just ask any CapX client.
